Thursday, February 26, 2015

Recently Greece has become rather obnoxious and unruly to the members of the euro-zone who have continually loaned it the money to stave off default. It appears that at least inside Greece they have accepted the argument that they are the victims of lenders willing to allow the country to fall deeply in debt. The elections have placed in power Greece's new 40-year old Prime Minister, Alexis Tsipras and left many euro-zone watchers stunned. His far-left Syriza party took 149
seats, and along with a junior coalition partner it now holds a
governing majority.

It is clear the people of Greece have decided they no longer want an agenda of austerity
and what they see as destruction. This has huge ramifications on those holding Greek debt. Syriza supporters are elated and have responded
with what might be described as "revolutionary" zeal. Greece's new government has a big plan. It is
deeply opposed to German Chancellor Angela Merkel's "Austerity" package
of spending cuts and social security reform. After making the key issue during the election a promise to
renegotiate Greece's massive debt obligation the new government also promised it will increase government spending, believing that more government
is the answer to Greece's sputtering economic malaise. Sadly, a conflict exist within Greece, it seems theGreeksdeplore
paying taxes to the government that provides its society with goods and services.

It is important to note that the people of Greece are not alone. All across Europe far-left groups are taking notice and hailing Syriza's rise to power as a watershed mark in how governments will deal with the economic malaise that has settled over the continent. When
the new coalition in Greece took a hard line towards austerity and how
it will negotiate with
"the troika" it opened the door to speculation about broader effects and
how it will effect the euro-zone. As some members advise caution and
concessions others disagree. A key player, German Chancellor
Merkel has taken a hardline and said that she is willing to accept a Greek exit from the EU. It is important to remember the Greek economy contributes only a very small portion of the overall euro-zone GDP.

While many people in America look on and see this as another example of Greece again failing to live up to its promises many people involved in this unfolding drama believe this is a
moment of systemic change. Below is an "open letter" to German citizens in which the new Greek Prime Minister recently made an appeal to the Germany people. To better understand the position of Greece it is important to read this letter that was published on Jan.13
in Handelsblatt, a leading German language business newspaper.Most of you, dear Handesblatt readers, will have formed a
preconception of what this article is about before you actually read it.
I am imploring you not to succumb to such preconceptions. Prejudice was
never a good guide, especially during periods when an economic crisis
reinforces stereotypes and breeds biggotry, nationalism, even violence.In 2010, the Greek state ceased to be able to service its debt.
Unfortunately, European officials decided to pretend that this problem
could be overcome by means of the largest loan in history on condition
of fiscal austerity that would, with mathematical precision, shrink the
national income from which both new and old loans must be paid. An
insolvency problem was thus dealt with as if it were a case of
illiquidity.In other words, Europe adopted the tactics of the least reputable
bankers who refuse to acknowledge bad loans, preferring to grant new
ones to the insolvent entity so as to pretend that the original loan is
performing while extending the bankruptcy into the future. Nothing more
than common sense was required to see that the application of the
'extend and pretend' tactic would lead my country to a tragic state.
That instead of Greece's stabilization, Europe was creating the
circumstances for a self-reinforcing crisis that undermines the
foundations of Europe itself.My party, and I personally, disagreed fiercely with the May 2010 loan
agreement not because you, the citizens of Germany, did not give us
enough money but because you gave us much, much more than you should
have and our government accepted far, far more than it had a right to.
Money that would, in any case, neither help the people of Greece (as it
was being thrown into the black hole of an unsustainable debt) nor
prevent the ballooning of Greek government debt, at great expense to the
Greek and German taxpayer.Indeed, even before a full year had gone by, from 2011 onwards, our
predictions were confirmed. The combination of gigantic new loans and
stringent government spending cuts that depressed incomes not only
failed to rein the debt in but, also, punished the weakest of citizens
turning people who had hitherto been living a measured, modest life into
paupers and beggars, denying them above all else their dignity. The
collapse of incomes pushed thousands of firms into bankruptcy boosting
the oligopolistic power of surviving large firms. Thus, prices have been
falling but more slowly than wages and salaries, pushing down overall
demand for goods and services and crushing nominal incomes while debts
continue their inexorable rise. In this setting, the deficit of hope
accelerated uncontrollably and, before we knew it, the 'serpent's egg'
hatched – the result being neo-Nazis patrolling our neighbourhoods,
spreading their message of hatred.Despite the evident failure of the 'extend and pretend' logic, it is
still being implemented to this day. The second Greek 'bailout', enacted
in the Spring of 2012, added another huge loan on the weakened
shoulders of the Greek taxpayers, "haircut" our social security funds,
and financed a ruthless new cleptocracy.Respected commentators have been referring of recent to Greece's
stabilization, even of signs of growth. Alas, 'Greek-covery' is but a
mirage which we must put to rest as soon as possible. The recent modest
rise of real GDP, to the tune of 0.7%, signals not the end of recession
(as has been proclaimed) but, rather, its continuation. Think about it:
The same official sources report, for the same quarter, an inflation
rate of -1.80%, i.e. deflation. Which means that the 0.7% rise in real
GDP was due to a negative growth rate of nominal GDP! In other words,
all that happened is that prices declined faster than nominal national
income. Not exactly a cause for proclaiming the end of six years of
recession!Allow me to submit to you that this sorry attempt to recruit a new
version of 'Greek statistics', in order to declare the ongoing Greek
crisis over, is an insult to all Europeans who, at long last, deserve
the truth about Greece and about Europe. So, let me be frank: Greece's
debt is currently unsustainable and will never be serviced, especially
while Greece is being subjected to continuous fiscal waterboarding. The
insistence in these dead-end policies, and in the denial of simple
arithmetic, costs the German taxpayer dearly while, at once, condemning
to a proud European nation to permanent indignity. What is even worse:
In this manner, before long the Germans turn against the Greeks, the
Greeks against the Germans and, unsurprisingly, the European Ideal
suffers catastrophic losses.Germany, and in particular the hard-working German workers, have
nothing to fear from a SYRIZA victory. The opposite holds. Our task is
not to confront our partners. It is not to secure larger loans or,
equivalently, the right to higher deficits. Our target is, rather, the
country's stabilization, balanced budgets and, of course, the end of the
grand squeeze of the weaker Greek taxpayers in the context of a loan
agreement that is simply unenforceable. We are committed to end 'extend
and pretend' logic not against German citizens but with a view to the
mutual advantages for all Europeans.Dear readers, I understand that, behind your 'demand' that our
government fulfills all of its 'contractual obligations' hides the fear
that, if you let us Greeks some breathing space, we shall return to our
bad, old ways. I acknowledge this anxiety. However, let me say that it
was not SYRIZA that incubated the cleptocracy which today pretends to
strive for 'reforms', as long as these 'reforms' do not affect their
ill-gotten privileges. We are ready and willing to introduce major
reforms for which we are now seeking a mandate to implement from the
Greek electorate, naturally in collaboration with our European partners.Our task is to bring about a European New Deal within which our people can breathe, create and live in dignity.A great opportunity for Europe is about to be born in Greece on 25th January. An opportunity Europe can ill afford to miss

While the above letter represents a splendid effort to re-frame the request from Greece in a positive way it does not resolve the problem of around 300 billion dollars of bad debt and the ramifications of what happens when a default occurs. One thing is crystal clear this creates a great deal of uncertainty for the euro-zone. All eyes will now watch this slow moving drama knowing that other countries and players will want similar concessions in regard to their debt if Greece is granted relief. While I am not interested in or advocating
a particular course of action I must ask how anyone or the markets will be able to interpret this mess as good news. It appears those in power will again try to devise another way to kick the can down the road remember as I wrote earlier, Greece is a problem that won't go away.

Monday, February 23, 2015

To most Americans China's economy is not front and center. It has been confirmed that China's factory sector unexpectedly shrank for the first time in nearly
2-1/2 years in January and we should not be surprised if more gloom lies ahead. This will raise expectations that policymakers will take more
action to reverse this trend. The official
Purchasing Managers' Index also known as the PMI, fell to 49.8 in January, China's National
Bureau of Statistics said, this is just a freckle below the 50-point level that separates growth from
contraction on a monthly basis. Slightly better results had been expected.

Several factors are currently negatively impacting growth in China, they include a housing slump, massive industrial overcapacity, erratic growth in exports, and a state-led slowdown in investment. China's economy has steadily lost steam in the last year with growth sinking to a twenty four year low of 7.4 percent. The downturn in manufacturing has also expanded into the country's fast growing services sector. The official non-manufacturing PMI slipped to 53.7, the lowest level since January 2014, from December's 54.1. The services sector has weathered the growth downturn better
than factories, partly because it depends less on foreign demand. This sector made up about 48 percent of China's $10.2 trillion economy
last year.

To
revive demand, China's central bank unexpectedly cut interest rates in
November after unveiling a stream of stimulus measures. Despite the steady policy support, both analysts and the IMF still expect economic growth to sag further this year to around 7
percent. In the January factory PMI, all but one of the sub-indices in the PMI fell from December, indicating entrenched weakness. Adding to the ugly report business
expectations fell to 48.7 its lowest level on record. Even factory employment dropped to its lowest in nearly a
year at 48.1, compared with the previous month's 47.9. New export orders, a proxy for the trade industry also fell, bottom-line little in the way of good news was evident.

In
line with recent trends, the factory PMI showed smaller manufacturers which are often privately-owned were hit the hardest. A widely watched unofficial PMI by HSBC/Markit, which includes small factories, came in for January at
46.4, versus 50.3 for large manufacturers that are mostly government owned and run. All this underscores
the challenges facing China as factory profits
grew at their weakest rate in two years during 2014. While China's
industrial ministry said last week that it would aim to grow the
manufacturing sector by 8 percent this year this is still a drop from last year's
actual expansion of 8.3 percent.

The reason flagging growth is so important is that China still needs
strong growth to add millions of new jobs, also a strong fear exist that
China is be about to enter a rapid disinflation process. Some
economists said the January reading was especially downbeat because it
suggested that factories did not enjoy a usual spike in business before
China's annual Spring Festival holiday that took place in mid-February this
year. As to just how valid these figures are, it must be said, many people
remain skeptical of the forecast and the numbers generated by China's
internal government agencies.

Sunday, February 15, 2015

The euro-zone currently faces a lot of problems without jumping into a
proxy war with rebels in Ukraine. I use the term proxy because without
the money and backing of outsiders things would most likely go quiet.
The failed and bankrupt country would most likely break into two parts
with the eastern half and its people who share strong ties with Russia
aligning itself with that country and Kiev, and the western oriented
portion of the country drifting towards stronger ties to the euro-zone.
What is the big problem with such a solution?

The whole concept of sovereign borders is a little gem promoted by those in power to galvanize the support of the people. Borders are a creation of man and not visible to the birds flying above.
Much bloodshed and many wars could be avoided if the issues of regime
change or borders could be handled in a more rational and constructive
way,
but do not expect this to happen. Borders and political control is a
problem that haunts man since before the written word. President Obama and other officials have talked about the legal sanctity
of sovereign borders, but in reality, this is an argument of
convenience that masks deeper issues. Obama calls those in rebel-held areas "terrorist" and Putin labels them freedom fighters. When it comes down to it we and the people of Ukraine are just
pawns in a sad power game. If you doubt this just ask some of the
many millions of people displaced from their homes in Syria.

It is a very important starting point to remember Ukraine was and is a failed state. Sadly, Washington is trying to repaint that picture and ignoring reality, at the same time that Putin is busy facing down the West by upping his game. While Obama has pulled out all the stops to paint Putin with a brush dipped in all the bad colors Putin has gone merrily about the business of carving out a land path to Crimea. It is almost like Obama is doing everything humanly possible to keep the eyes of America diverted towards distant lands where he can honestly say the challenges are great and dire situations exist, this takes the focus away from the many problems haunting America at home. During all this not only has Putin played Obama as a fool, but he appears to
be having fun doing it. Those who point to the harmful sanctions imposed on
Russia should realize that those placing them are also suffering and
as time goes by it is becoming more evident the Euro-zone is not behind
ramping up hostilities in Ukraine.

A major advantage that Putin holds other than having a huge well-armed
army just across the Ukrainian border is that any army cobbled together
to face off with him would most likely be unenthusiastic and politically
troubled at best. American soldiers will deploy to Ukraine this spring to
begin
training four companies of the Ukrainian National Guard, the head of US
Army Europe Lt. Gen Ben Hodges said during his first visit to Kiev
recently. The number of troops heading there is still being determined,
however, this training
effort is said to be part of a US State Department initiative "to
assist
Ukraine in strengthening its law enforcement capabilities, conduct
internal defense, and maintain rule of law" a Pentagon spokeswoman said. However, this signals a deeper role for America that troubles those concerned about further involvement.

Dead Ukrainian Soldiers A Hidden Reality

Reports from the front that are often buried or hidden from public view
appear to confirm that Ukrainian troops have been sent into a meat grinder by their current government. If Iraq is any example do not expect any amount of American training to make a great deal of difference. Financier
George Soros, who’s been helping foster Ukrainian reform recently told a
gathering in Davos that “there is a new Ukraine that is determined to
be
different from the old Ukraine". He claims this new group is unique in
that it is
not only willing to fight but engage in executing a set of radical reforms, but it is up against the old Ukraine that has not disappeared
and it is also up against a very determined design by President Putin to
destabilize it and destroy it. But it is determined to assert the
independence and European orientation of the new Ukraine.”

While not trying to be optimist or pessimistic I think it is important to remain realistic as to just how much we can really do. Sometimes adding fuel to the fire does more harm than good. Again, I mention Ukraine is a financially failed state and while we
can
point to its potential and the massive oil, gas reserves these by all
rights should belong to the people and for their benefit. Considering
that Ukraine needs $15 billion in loans and grants in the next year to
stabilize its economy in addition to its bailout from the International
Monetary Fund. Ukrainians it is clear they have dug themselves into a
deep, deep hole. A 20-plus year history of industrial levels of
corruption flow from a
series of bad governments after Kiev became independent of the Soviet
Union.

Bottom-line is that America again continues to be following an unfocused foreign policy that cuts off its nose to spite its face. It is perfectly clear why
many Americans have thrown up their hands and are full of disgust
because in many ways we are driving Russia towards the East and into the
open arms of China. This could create more problems long-term than it solves short term. It borders on the edge of insanity this so called war has not developed organically but appears to be the product of meddling. Mercenaries and money from America appear to be backing and propping up Kiev with Obama being the "champion" for this failed bankrupt country. How ironic it is that the chief instigator for creating this volatilesituation was the winner of the Nobel Peace Prize for 2009 and that the man he targets is the 2007 " Man Of The Year." named by Time Magazine. The best way for the West and Kiev to prove they are on the right path is by letting the eastern part of the country seceded and then making Kiev a center of economic and democratic success.

Wednesday, February 11, 2015

I began thinking recently about how most people are totally unprepared for any kind of massive financial shock to society. This vulnerability and invisible burden is carried by the masses as most
people do not have at their disposal the full range of investment options
those very engaged in the markets have developed. You should view the economy as an economic battlefield and imagine your enemy carrying an M16 while you are armed with only a stick.

Building a better arsenal is not an easy task and cannot be accomplished overnight, it takes both planning and a great deal of effort, this is not a task that should be outsourced or entrusted to someone else. Your financial survival depends on it, often people learn this lesson only after great disappointment and loss. Even though we are often lead to
believe shortcuts exist the truth is the learning curve in how to invest and protect your assets is both long and hard. Simply reading a book, taking an investment
course, learning a new charting or technical system is no guarantee you
will make money. Most investors only learn after a series of costly mistakes
and errors how difficult investing really is.

This is a very important messagebecausea lack of investment options means that many people will be left
unable to react if and when a trend dramatically shifts. This leaves the
bulk of society extremely vulnerable when a shift does occur. You do not want to be in this group! A major concern should be that we are often lulled into being far too complacent
as to the real economic risk that surrounds us. A glaring example of this is
how people just assume the bank will honor their credit lines or they will be
given access to their savings in the case of economic difficulty. In a
crisis as everyone rushes to the exit, it is silly to think you will be
served in an orderly fashion or even fairly. Mind the "small print" and remember the bank is not your friend.

When will the next financial crisis hit and how deep will it be? That is
a hard thing to predict or answer, just as difficult is speculating the
form it will take. It has been many years since panic has dominated the streets and most Americans have never faced such a situation. It is important to recognize several catalysts exist that could usher in such a
scenario, but predicting such an event is complicated and difficult to time. Watershed
events can occur in the blink of an eye or be spread out over weeks or
even months. The base on which our economy sits is comprised on ever growing debt that is unsustainable. Because this system has been able to exist for so long does not mean it can
continue. The fact the economy muddles through and forward does not guarantee that we will not suffer financial harm as individuals.

The study of economics is often baffling and confusing. Many economic theories exist, but they are full of holes and conundrums.Much of how people react to an overall economic policy may have to do with timing and
perception as much as it does with reality. The science of economics is riddled full of loops that feedback
upon themselves and unexpected pitfalls based on expectations that may never take place.
All this can become quite abstract with economist seldom agreeing and often predicting events that never unfold as expected or planned. Many of the "modern monetary
theories" in use today reflect an
attitude that we can control economic cycles better than in the past by using newly forged tools that have not been proven over time.

Few people really think about the economy to any great degree or even
try to understand it as they go about their daily existence. We who find the subject interesting and study it
or are involved in seriously self-directed investments often forget this
fact. While they will tell you otherwise the average person only begins
to care about "the economy" when they are directly affected or financially slapped in the
face. To navigate the treacherous terrain of investing without a
road-map or knowledge means you travel at your own peril. This does not
mean that even a person totally ignorant of basic economics will not
have an opinion or garner a huge following.

I contend that never before has mankind diverted such a large
percentage of wealth into intangible products or goods and this is the
primary reason that inflation has not raised its ugly head or become a
major economic issue in recent years. Like many of those who study the
economy, my misgivings with current economic policies are many, of chief concern is the massive debt being accumulated by governments
and the rate that central banks have expanded the money supply. If
a great deal of this money would suddenly shift into tangible goods seeking a safe haven inflation
would soar even as debts go unpaid and promises are left unfilled. In such a situation you will want to be able to defend all you have worked for with more than a stick.

FOOTNOTE: I encourage comments and urge you to explore the archives
for any other articles that might interest you.

Sunday, February 8, 2015

Gaming the system has become a national pastime for many Americans. Once
on these programs it is often hard to get someone off of them, on the
contrary getting on one program often helps a person qualify for
another, then another. Today people do this in many ways, we have layered
layer upon layer of programs to help the poor and needy. One such
program that is often misunderstood and sometimes confused with Social
Security Disability insurance and many people are not even aware exist is
Supplemental Security Income.

SSI is a Federal government program originally created to provide "stipends" and help low-income people who are either age 65 or older, blind, or disabled. The program is administered by the Social Security Administration and funded by funds from the treasury and not social security taxes. SSI is a massive program that tends to lay just below the surface out of sight of many hard working Americans busy trying to earn a living. It has become the go to "sweet spot" for aid. Unlike food stamps, SSI is structured like the earned-income tax credit and unemployment
insurance in that it delivers benefits in the form most poor people find most
useful, cash.

What is Supplemental Security Income?Supplemental Security Income (SSI) is a Federal income program funded by general tax revenue;

It is designed to help aged, blind, and disabled people, who have little or no income; and

It provides cash to meet basic needs for food, clothing, and shelter.

To see if you are eligible for SSI benefits you merely have to link onto
a government screening tool and take 5 to 10 minutes to answer a few
questions. This also will tell you if you are also eligible for other
benefits. For a little background on this program SSI was created in 1974 to replace federal-state adult assistance
programs that served the same purpose. The restructuring of these
programs was intended to standardize the eligibility requirements and
level of benefits. The new federal program was incorporated into Title XVI (Title 16) of the Social Security act. Today the program has grown to provide benefits to approximately eight million Americans.

One requirement for SSI is that the individual's resources are
below a certain limit. This amount is $2,000 for a single individual and
$3,000 for an individual and their spouse (whether the spouse is
eligible for SSI or not), $4,000 for a child applicant with one parent
living in the household, and $5,000 for a child applicant with two
parents living in the household.
However, conditional benefits may be paid if a substantial portion of
the resources are considered non-liquid, resources that cannot be sold
within 20 working days, if they agree to sell the resources at their current market value
within a specified period and repay the money after the non-liquid
property is sold. However, it should be noted that not all actual resources are counted in calculating an individual's or couple's resources for SSI purposes. The numbers below show the rising cost of this program, I did not show every year to save space, after 2009 the numbers became elusive.

1990 - 4,817,127 - $16,132,959,000

1992 - 5,566,189 - $21,682,410,000

1994 - 6,295,786 - $25,291,087,000

1996 - 6,613,718 - $28,252,474,000

1998 - 6,566,069 - $29,408,208,000

2000 - 6,601,686 - $30,671,699,000

2002 - 6,787,857 - $33,718,999,000

2004 - 6,987,845 - $36,065,358,000

2006 - 7,235,583 - $38,889,000,000

2008 - 7,520,501 - $43,040,000,000

2009 - 7,676,686 - $44,906,000,000

This could be interpreted to mean that when you get older you will not be forced to live within your means and on your meager social security if you have saved nothing, and if you are younger the same fact may apply. The SSI program, or Title XVI of the Social Security Act 1611, provides
monthly federal cash assistance of up to $698 for an individual and
$1,011 for a couple (as of 2011) to help meet the costs of basic needs
of food, shelter and clothing. In most states, SSI eligibility usually
assures concurrent access to important medical coverage under the
various state Medicaid programs and sometimes access to section 8 housing benefits.

In some states, supplemental payments are made by the
state, increasing the cash assistance available through SSI. For
example, the state of California, through its State Supplementation
Program (SSP), increases the cash assistance by $171 per month for a
disabled or aged individual with access to cooking facilities in 2011,
making the total SSI benefit $845 per month. So while supporters hail SNAP as a key income support for the working poor,
seniors and the disabled, as well as an “automatic stabilizer” it must be noted the government already has
programs, and bureaucracies, for each of those groups and policy goals.
This means as an example, a third of the seniors living on food stamps also get
Supplemental Security Income (SSI).

A big question is whether once on SSI a person will ever start looking
for work again in time. Look at U-6
unemployment over recent years and it suggests many of the
people on the edge of the labor force have hit the exit.
One explanation for that may be government benefits directly affect
incentives to look for work. This means more generous unemployment
benefits tend to elevate
participation rates since workers must be looking for work to qualify.
With disability insurance (DI), however, the opposite applies: to
qualify applicants must generally demonstrate that they cannot work. In
theory, disability and unemployment should not be correlated and for many years they were not. Due to changes in 1984 DI eligibility criteria were eased so that applicants could
qualify based on a combination of conditions rather than just one.

Since then, highly subjective conditions such as back pain and mental
illnesses have grown to account for most DI beneficiaries, and claims
have become more correlated with unemployment. This strongly suggests
that many workers find a way to qualify for DI
when other benefits have been exhausted. Although DI recipients may initially have climbed because
the economy was weak, their numbers will almost certainly not decline
as it strengthens. Past figures show only 4% of beneficiaries return to
work
within ten years. The proportion of working-age adults on DI has risen
from 1.3% in 1970 to 4.6% in 2013 and while the participation rates
appear cyclical at first it is beginning to look more structural. Europe may hold some important lessons as to what we face going forward.

In the 1970s DI became
more generous in the Netherlands, and case loads exploded. Had the
increase in disability numbers shown up in unemployment instead, the
Dutch unemployment rate, which was 6% in 1980, would have surged to
13.4% says a 1992 report. The
crushing expense of DI eventually forced the Dutch government to make
reforms years ago that made employers bear more of
the expense of employees who end up on the system. Since then, case
loads have dropped. In America the DI trust fund is expected to run dry
in 2016 if current trends continue. This would lead a person to see the long term implications of people not working but turning to more government aid will become a heavy burden for society.

Saturday, February 7, 2015

Nobody will argue both the automobile and mankind are solidly linked for the immediate future, however, it should be noted that the automobile is not a stand alone entity and
requires a massive support system. Roads and highways, parking areas,
repair stations and fuel stations are just a few of the parts that make
up the system. Most vehicles are used on average about one hour a day,
this means the rest of their existence is spent in storage. This is not an efficient use of space or resources and will have a major impact on how we plan in the future. Far too much of our assets are tied up in expensive concrete and pavement that is only used for brief periods during peak load.

Empty Roads At Night Come At A Great Cost

Our current system allows and is based on the
largest vehicle using that space, even if it occurs infrequently. The
issue of how large a vehicle "needs" to be is an area that needs to be
addressed and rethought. For example, the insistence by the fire
department to be able to turn around a large hook and ladder truck in a
single family residential neighborhood is a bit silly and leads to an unintended consequence and urban sprawl. Several design flaws in planning modern communities create traffic patterns that make travel less efficient.

Incentives to vary times of
travel thus reducing "rush hour" congestion, expedites the flow of
traffic adding to efficiency. Increased efficiency eliminates the need
for additional roadways and traffic controls, it would also save fuel
and reduce pollution. Our goal should be to keep at a minimum the square
footage of pavement necessary to accomplish efficient movement of
traffic. The grid pattern, used in many cities after the inception of the
automobile, has been replaced by a maze, or a can of worms design within
a larger grid pattern. The case made for such a pattern in our
neighborhoods is privacy, safety, better quality of life, and that it
defuses traffic. These traffic patterns often make it necessary for a
person leaving their home to drive for several minutes just to reach the
entrance of their sud-division that may be substantially closer as the
crow flies.

A strong argument can be made that the more time a vehicle is on the road and
the greater distance it has to travel causes environmental damage using
more gas and creating more pollutants, this would call into question
the logic and benefits of such patterns. Had the automobile not become so popular our culture would have developed in a totally different way. The two and three car family contributed greatly to the growth of sprawling suburbs in recent decades. I'm not in any way advocating doing away with cars or trucks, they are
important and add to our quality of life, but it is important to point out that
the support system for the automobile makes our footprint on the planet
much larger than many people might want to think and tends to weaken our ability to sustain our current lifestyle.

We may soon see an expensive and unwise extension of this support system
across America under the guise that we are creating new jobs by
improving infrastructure. Get ready for a barrage of talk from Washington pushing the myth that infrastructure is a "silver bullet" that will boost the economy and drive growth.
As usual, the politicians in search of easy answers often dust off an old
idea polish it up and act as is they have a new magic formula. While
most people and economist agree infrastructure is important I contend
that the old 80-20 rule applies to this vital part of our lives more
than they might want to admit. It is ironic timing for such a push to pour more concrete across America comes just as technology begins to explore using driver-less cars
and trucks to more efficiently move both people and freight. Such
technology would revolutionize and shift the movement of semis and large
trucks to nighttime and off-peak hours.

Much of this article is a rehash or extension of an article I wrote in the fall of 2012 that pointed out traffic problems are often complex yet the simplest changes often can make a
big difference. Traffic flow can come to a halt over something as simple as to
how or where cones are placed in a work area. All inexpensive solutions
to removing the "choke points" should be explored as an alternative to immediately super-sizing everything as we often do. In my book "Advancing Time" I also wrote about how our understanding of cities and people when dealing with urban planning is far from complete. In an ever faster changing world trying to apply a "one size fits all" strategy risk leaving everyone feeling poorly fit. We must carefully create homes for the "animal" known as man, instead of high maintenance concrete environments for the machines built to serve us.

Tuesday, February 3, 2015

When doing a computer search of "Coming To America" two choices leap from the page. The first, Coming to America is a 1988 American romantic comedy film directed by John Landis. It is based on a story originally created and stared in by Eddie Murphy. The second, "America" (also known as "They're Coming to America" or "Coming to America") is the name of a patriotic song written and recorded by Neil Diamond. Today much more is coming to America and that is money and wealth from all over the world.

While America has been described recently as the cleanest dirty shirt in the closet, or the best house in a bad neighborhood, both place it as the least worse option. The reality is other options fail to pass the smell test. This means what is coming to America is wealth and money seeking a "safer" place to take refuge from the coming storm. Today America has become a money magnet, Lady Liberty the symbol of America that stands in the harbor of New York while a bit tarnished is still giving people hope even if Washington is not overwhelming us with the same glowing feeling.

The money coming into America is flowing into both bonds and stocks. This supports lower interest rates and drives the stock market ever higher. Do not underestimate the power of cross border money traveling into the country as a driving economic force. Another thing you should not underestimate is the advantage our currency has because of its role as the world reserve currency. This makes it the "default currency" and by the size of its market, float, and liquidity the currency by which all others are weighed, measured, and often pegged. The chickens are coming home to roost for countries that face growing debt and policies that make them uncompetitive. Some of these countries are increasing looking at ways to confiscate the wealth of their citizens, it is only logical these people would move their money to a safer place.

Countries can steal wealth by way of various Trojan horse methods such as monetizing debt through printing massive amounts of new currency or new taxes. As people all over the world try to get out of their home currencies a surge in the value of the dollar is logical. In the end this will not be the salvation of America or its economy but it sure does help create a bit of a lift that we would be wise to take advantage of. As things turn ugly across the world it is only expected that as in Neil Diamonds patriotic song the wealth of the world like its people just wants to be free. Like the people he sings about it seems wealth also appears to have legs and as the people, everywhere around the world the money is coming to America! Yes, it is coming to America, today, today!

Footnote #2; If you look close you will see the currency markets are beginning to
reflect diminished confidence in the system central banks have created.
As the currency games continue to ratchet ever higher it is becoming
more apparent that we are standing on shifting sand. The schemes bankers have used for
years to hide and transfer debt are coming under attack, if they crumble
under the assault it will culminate in a reset of the economic system
across the globe. The important article below explores what we might face
in the next round as these dangerous games continue.http://brucewilds.blogspot.com/2015/01/currency-markets-reflect-diminished.html

Sunday, February 1, 2015

Good luck with getting a clear view of our economic future. Somewhere between what we are told is occurring in the economy and what we see happening on Main Streets across America is the real and true authentic economy. It is ironic that the more the economy slows it only reinforces the idea
that the Fed needs to pour even more fuel on the fire. This is exactly what many of us oppose and see as pure insanity. Some people point
to or fear that deflation will take hold causing a great deal of pain
and reduced spending by consumers going forward. Those behind increased and continued easing say more action is needed or a loop will develop that feeds on itself and ends in a deflationary depression.

On the other side of this argument are those of us who have a problem with
current Fed policy and claim that after more than six years of expanding
money supplies and dropping interest rate the economy has not fared
as well as many in government represents. We that object with what has been done, loudly state that in the future both the economy and society will pay dearly for the sins of
the Fed and that no options exist to get out of the box they have put us in. The fact is low interest rates have punished the very people
who have done the right thing by saving and sacrificing to put away
money for future needs. It must be noted savers have been encouraged and forced to take
on risky investments as they search for higher yields
that are unavailable in safer more conservative options.

This debate continues to polarized those who study the economy and play in the
dangerous land of investments. Meanwhile the failure of a crash to
materialize and bring markets back to reality over the months and years is causing a breaking in the
ranks. We have reached the point where many of the nonbelievers in current policy are
capitulating and joining with those who live by the mantra "don't fight the Fed". This
song of the market sirens that promise both wealth and profit has lulled many into complacency. Each day more investors surrender to lure of the markets and buying into what they had only a short time ago seen as the dark-side. Those who remain firm in their beliefs point to this as another sign we are nearing the top a place where all bulls are fully invested, this "all in" situation is a common sign of a market top.

Do
not expect this to be resolved and either faction to accept defeat or to
admit they are wrong until the economy reveals the truth and abundant solid undisputed growth is evident or we have sunk into a mess so dire that financial Armageddon is upon us. Our
current perplexing economic state continues to confound and confuse. It
seems every time the numbers fail to meet expectations or fall short
those in power or the media raise the bar and crank out the fairly dust,
some hype, or spin a tale of coming promises and stories of better times soon to
come. This has postponed the day of reckoning and a resolution as to the
debate. The conundrum we face is how to resolve this mess in the least
damaging way. To those of us who doubt the numbers a massive problem exist on how to exit the current
path.

Speculation has the potential to be a massive time waster, but both men and women tend to get sucked into this pastime that can while away the hours. This is not to say thinking through problems or looking at the various options being presented has no merit, but more often than not humans waste a lot of time pondering things that will never happen or never did. We even ponder why someone took a certain action or why something took a unpredictable turn.

Speculation is defined by Oxford University Press as,a noun, spekyəˈlāSHən as the forming of a theory or conjecture without firm evidence: such as "there has been widespread speculation that he plans to quit" or as the act of investing in stocks, property, or other ventures in the hope of gain but with the risk of loss:such as "the company's move into property speculation" This
article is focused on the first definition of speculation. It is true
that in terms of investment or other such pursuits
speculation can extend into a form of placing a bet by buying or selling
a commodity or stock. It can also be the driver for someone to scream a
prediction from the rooftop as a way to prove their superior judgement
or intellect. As I have written in a prior post I consider predicting
the future is an impossible task, a fools errand, full of
pitfalls.

Events never seem to unfolded
as we might expect or predict. When you see how the world has developed,
the twist and turns are most unpredictable and full of what the author, Nassim Taleb calls "Black Swans", this term is used to describe
events that seem to descend out of nowhere catching everyone by surprise. A
great example of speculation gone wild can often be found on the Sunday
morning talk shows emanating from
our nations capital. These shows originally designed to inform and
report the crucial news of important issues facing our nation tend to
quickly leave the facts and stray into the area of speculation. The line
between opinion and speculation is fine and can easily be crossed. Blurring this even more is the habit many people have as stating an opinion as a fact does not make it one.

Speculationville is where the confident and suave television and news commentators, politicians,
and the experts that speak with such authority live, I include the pundits
and so called specialist. Whenever, I find myself drawn down the path toward Speculationville I try
to stop and ask if the journey ahead has any real merit or payoff. Often the subject we speculate over is a big factor into just how frivolous the effort is. This means I find very annoying the efforts of media, news programs, and talk shows to drag us into huge areas of speculation instead of focusing on facts and important issues. When they start talking about who will run for President in not only 2016 but 2020 we know where they are taking us.

It is often not the message they crank out, but the spin and way they project it with their heads all a bobbing and
their arms moving all around. It seems they have risen through the ranks by stating their case with such brilliance
and force that we are carried away by their enthusiastic message. As the words spew from their mouths and we read the reams of
material they write it is easy to overlook the large number of often misstated facts and forget they are speculating or merely guessing. Sometimes they even go as far as to tell us exactly what
someone was thinking, for example a commentator might say, "when Martin jumped he knew it was to his death", I ask, how do they know
that? It is possible that Martin was an optimist thinking he might survive the fall or the light never came
on.

Fact is that when it comes down to what someone is or was thinking unless these
authorities have had a deep honest one on one conversation with that person they are only speculating. After they have used every recent "buzz phrase" they say, "that being said" and after "having said that" they
often wow me with "just do the math" or "it is not if, it is when". A
major pet peeve of mine is the mixing up of "millions and billions" of
dollars when taking about money or cost. But what sends me over the top
is a line of pure speculation often used by politicians and our so called public servants
to justify some unsavory action, "it would of been far worse if we had
done nothing". How do they know that? On more then
one occasion when it comes to our government I find myself wishing they had done nothing.

We have all witnessed the crazy unenlightening information generated
from media coverage during "live crisis" coverage of a news event, it
is a reminder that often the world is clueless. It seems that people love to defer to the opinions and advice of so
called experts so they don't have to think. When we look behind the curtain, we often find their
background in the subject is weak and short, or clouded and blurred by
bias. One thing I do know that is not based on speculation or hearsay
is that a certain point speculating about the future tends to get excessive and becomes a great waster of time. Most of us might better spend our time focusing on real problems in the real world rather then whether Michelle Obama will run for President in 2020.

About Me

Bruce Wilds is a contractor that owns real estate in the Midwest, his holdings include apartments and office complexes. He is anchored to reality and the economy as he maintains, designs, and leases buildings. This has made him keenly aware of rapidly changing lifestyles, this blog incorporates many of the experiences and knowledge from his hands-on business style, extensive travels, and studies of history, politics and economics.